Taxpayers submitted reports for 2015 and for the first quarter of 2016. And immediately for these two periods, requests from inspectorates began to pour in demanding clarification of the indicators reflected in the accounting and tax reporting. Inspectors also require the share of VAT deductions to be justified.
Many companies carefully explain everything that interests fiscal officials. However, is it really necessary to write detailed explanations in response to a request? Perhaps, even without them, there is a logical explanation for the notorious “discrepancies” in reporting. Individual indicators in declarations should not coincide at all. This means that there are no discrepancies and there is nothing to explain. Tax officials should be well aware of this.
The company that turned to me for help also received requests from fiscal officials demanding clarification of the indicators reflected in the reporting. The organization had many branches, so the number of requests coming from different inspections grew alarmingly. In this regard, there is a need to systematize all requests and requirements received.
The company's management decided to optimize the work of the accounting department. This was necessary in order to avoid copying unnecessary documents and writing unnecessary explanations. After all, everything took up a lot of working time. The management came to the conclusion that it was necessary to develop a unified approach to the formation of explanations for unlawful requests.
Is it necessary to explain the discrepancy between VAT and income tax?
The company received a request to provide clarifications in the form approved in Appendix No. 1 to the order of the Federal Tax Service of Russia dated 05/08/15 No. ММВ-7-2 / [email protected] The reason for sending the request was a desk audit. The fiscal authorities requested clarification on the indicators reflected in individual lines of the balance sheet (Appendix No. 1 to the order of the Ministry of Finance of Russia dated July 2, 2010 No. 66n). And they also demanded to attach documents confirming the reasons for the decrease in the “Financial Investments” indicator in the balance sheet asset.
But the Tax Code does not allow desk audits of financial statements! Controllers have the right to request documents and explanations on issues related to the calculation and payment of taxes (subclause 1, clause 1, article 31, articles 88, 93 of the Tax Code of the Russian Federation). And financial statements are necessary for users of these statements to make economic decisions (Part 1, Article 13 of Federal Law No. 402-FZ dated December 6, 2011).
In addition, the tax authorities monitor compliance with tax legislation (the regulations on the Federal Tax Service, approved by Decree of the Government of the Russian Federation dated September 30, 2004 No. 506), the Ministry of Finance of Russia is responsible for accounting reporting (Part 1 of Article 22 of the Federal Law dated December 6, 2011 No. 402-FZ, Decree Government of the Russian Federation dated June 30, 2004 No. 329). Therefore, in the request, the inspectorate may refer to a desk audit of a specific declaration and its indicators. And inspectors do not have the right to demand explanations and documents regarding financial statements. However, it is still worth responding to such a request from the inspection. A competent refusal to provide explanations will save the company from receiving a report on the discovery of facts indicating tax violations (Article 101.4 of the Tax Code of the Russian Federation), as well as from the need to further challenge this report. With my help, the organization prepared a letter refusing to comply with the inspection requirement. In response to a request for clarification, the company indicated that tax legislation does not provide for chambers in relation to accounting statements. At the same time, fiscal officials do not have the authority to control it.
There is no direct connection between “profit and VAT”
Almost every company received a requirement to provide explanations as part of a desk audit regarding VAT. Fiscal officials are often asked to explain the reasons for the discrepancies between the indicators that make up the revenue in the annual income tax return and the size of the tax bases reflected in the VAT returns for all four quarters of the reporting year. What documents are on the camera for personal income tax? It is illegal to demand >>>
In my case, the company received such a requirement as part of a desk audit of the VAT return for the fourth quarter of 2015. In addition, inspectors demanded to explain why the share of VAT deductions exceeds 89 percent. This is the permissible share of deductions used by companies to independently assess the risks of inclusion in the inspection plan (Appendix No. 2 to the order of the Federal Tax Service of Russia dated May 30, 2007 No. MM-3-06 / [email protected] hereinafter referred to as the Concept). In the third quarter of 2015, the share of deductions was 93 percent, in the fourth quarter of 2015 - 92 percent. The desk audit was carried out for the fourth quarter of 2015 - inspectors could only demand clarification for this period. In the letter, the company reminded fiscal officials that the tax period for VAT is a quarter (Article 163 of the Tax Code of the Russian Federation). However, difficulties arose in preparing the answer. It turned out that it is difficult to explain the specific reason for the discrepancies in the declarations. The fact is that the concept of “income” for profit tax purposes (Articles 248–251 of the Tax Code of the Russian Federation) and the concept of “tax base” for VAT purposes are not identical. Consequently, revenue for the purposes of calculating income tax and the tax base for VAT purposes may be different. The company carried out both transactions subject to VAT and transactions not subject to taxation (Article 149 of the Tax Code of the Russian Federation). Discrepancies in indicators can arise not only due to these nuances, but also due to the use of completely legal optimization methods. This, in particular, issuing invoices at a later date. This method is often used at the end of the year, when the company closes large contracts. She may receive significant revenue, and the amount of VAT payable will also increase. To this amount are added advances from buyers, from which it is also necessary to calculate VAT (clause 1 of Article 167 of the Tax Code of the Russian Federation). In this case, for goods (advances) shipped (received) in the last days of the reporting year, invoices are issued at the beginning of the next year. After all, the supplier must issue an invoice to the buyer within five days from the date of shipment or receipt of an advance payment (clause 3 of Article 168 of the Tax Code of the Russian Federation). This means that it is possible to postpone the payment of VAT from January 25, 2021 to April 25, 2016 (Clause 1 of Article 174 of the Tax Code of the Russian Federation). Of course, the last thing the organization wanted to do was explain such reasons for discrepancies in the controversial declarations. Therefore, the society decided to refuse this part of the requirement. The fact is that inspectors most often require clarification in connection with errors or contradictions in declarations (clause 3 of Article 88 of the Tax Code of the Russian Federation). And the company asked the tax authorities to indicate what these errors or contradictions were. We also asked the inspectors to provide a link to the regulatory legal act, which states that revenue for the purposes of calculating income tax must be equal to the VAT tax base. In the letter, the company emphasized that Chapters 21 and 25 of the Tax Code of the Russian Federation established different procedures for the formation of these indicators.
Sample of writing an explanation about discrepancies in the VAT and profit returns
The first type is for shipment, the second is for payment. The sale of goods when the goods have been shipped to the client and documents for payment have been presented is considered the shipping method.
Upon payment it is considered when the shipped goods were immediately paid for by the buyer.
What is non-operating income?
Such income includes:
- Transactions with foreign currency securities.
Current as of: June 8, 2021 Which response to the Federal Tax Service requirement is considered formalized A formalized response to the Federal Tax Service requirement is considered a response containing documents in XML format. Documents can be generated in this format, for example, when using an accounting program.
The list of documents that can be submitted to the tax office in xml file format is as follows (Table 4.8 to the Order of the Federal Tax Service dated June 29, 2012 No. ММВ-7-6/): Non-formalized documents, in addition to the response to the request of the Federal Tax Service, the Tax Department allows sending documents in electronic form and in other formats.
During a desk audit, the taxpayer may be required to provide explanations to the tax authority as to why the revenue in the VAT return does not coincide with the data in the current account.
More samples and forms in the “Glavbukh System” Forms
This situation can occur for various reasons: for example, if the company’s account received financial assistance from the founder or funds under a loan agreement. These types of income are not subject to the simplified tax system.
In this case, the head of the organization must prepare a written response to the request for explanations and submit it to the Federal Tax Service either in person, on paper, or through the TKS operator. The deadline for submitting explanations to the Federal Tax Service is five working days from the date of receipt of the request.
The legislation establishes that tax authorities have the right, based on the results of a desk audit of VAT reporting, to demand an explanation for this reporting. Inspectors use this right in the following cases:
- Non-convergence in the control information report;
- The report contains errors;
- Too large deductions;
- Information from different reporting documents does not agree.
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Receiving a request and responding to it Tax authorities send the request electronically, through the electronic document circulation manager. The taxpayer must respond to the Federal Tax Service's VAT requirement also in electronic format.
But it is not so. Not all income that forms the income tax base is included in the revenue for calculating VAT. After all, there are operations on which you have to pay income tax, but at the same time you don’t have to calculate VAT. An example of this is positive amount differences (clause 4 of article 153, clause 11.1 of article 250 of the Tax Code of the Russian Federation). Their amount is included in non-operating income. But at the same time, they do not affect the VAT base in any way.
It also happens the other way around: there are transactions subject to VAT that are not taken into account when calculating income tax. By the way, these include the gratuitous transfer of goods. Let's show it with an example.
Based on the results of a tax or reporting period, a company may receive not only a profit, but also a loss. After all, an organization’s income does not always exceed its expenses. At first glance, the situation is normal. However, as soon as you show a loss in your declaration, the tax authorities will demand clarification.
Our advice to you: attach an explanatory letter to the loss-making declaration immediately, without waiting for a request. After all, a negative tax base can cast doubt on the company’s reliability in the eyes of controllers. And regular losses may even lead to an on-site inspection (clause 2 of the Publicly Available Criteria, approved by order of the Federal Tax Service of Russia dated May 30, 2007 No. MM-3-06 / [email protected] ). We have clearly shown below what a letter explaining the reasons for the loss might look like.
Frequently asked question: VAT discrepancies associated with the discovery of an error in VAT calculation between the company data and the supplier. The occurrence of these discrepancies may be due to a number of reasons:
- The supplier's declaration does not contain information about the shipment of goods;
- The supplier of the goods is an intermediary.
The current legislation stipulates that when issuing an invoice on behalf of its customer, the intermediary is exempt from charging VAT; this function must be performed by the direct supplier. Thus, the presence of shortcomings may be due to the lack of appropriate actions on the part of the principal, failure to provide them with accounting logs or incorrect provision of them. In this case, it is necessary to additionally provide supporting documents: a letter from the counterparty, a commission agreement.
Typically, the Federal Tax Service specifies in the request the period within which documents and/or a written explanation must be submitted.
Requirements are received both in paper form by mail and electronically. The format of the requirements depends on how the individual taxpayer is reporting.
Following the norms of the law, a response to the tax demand must be prepared and sent within five working days (clause 3 of Article 88 of the Tax Code of the Russian Federation).
Most often, the answer is written in any form, but taxpayers can use the recommended form of the answer as a basis.
If the tax office’s request for documents or explanations came electronically, do not forget to send a receipt. The organization is given six working days for this (clause 5.1 of Art.
23 of the Tax Code of the Russian Federation).
The deadline for responding to the request of the Federal Tax Service is fixed. In exceptional cases, the tax office may change it. The Federal Tax Service can also increase the period for submitting documents at the request of the taxpayer, but there must be compelling reasons for this (illness of the person responsible, a large volume of documents requested, etc.).
If you think that the tax demand is unfair, you still need to write an explanation. In your explanation, you can refer to the articles of the Tax Code of the Russian Federation and justify your position. It also happens that the tax inspector is wrong.
You need to defend your position.
Sometimes a list of documents must be attached to the request. This is done if the taxpayer brings the documents personally or sends them by Russian Post.
Sample list of documents to the tax office upon request:
- Sales book for the first quarter of 2021
- Purchase book for the first quarter of 2021
- Invoice (for prepayment) No. A0000000001 dated March 14, 2019
- Invoice No. 2172 dated 03.03.2019
- Consignment note No. 2172 dated 03/03/2019
How to sew documents for the tax office upon request? The taxpayer usually staples the submitted documents together with the inventory. There are no stitching rules.
The main thing is to certify all copies of documents for the tax office accordingly.
As such, there is no sample explanatory note to the tax office upon request. The type of explanation will directly depend on the content of the requirement and its reasons.
Let's summarize. The deadlines for submitting documents at the request of the tax inspectorate are set out in the Tax Code of the Russian Federation. The Federal Tax Service also duplicates these deadlines in the submitted requirement.
Responses to the tax authorities’ requests for explanations are submitted both on paper and electronically.
Let's give an example of a response if the Federal Tax Service has identified discrepancies in revenue in two sources of information received: in the VAT return and the income tax return.
To the Deputy Head of Interdistrict Federal Tax Service No. 4 Zaikova T.I. From Knopka LLC, TIN 6656543210 06.08.2019
In response to your request No. 569 dated 08/01/2021, we explain the following.
The amount of income from the sale of goods (work, services) shown in the corporate income tax return for 6 months is indeed less than the amount of sales revenue shown in the VAT returns for the first and second quarters of 2021. This situation arose in connection with the reflection in the second quarter of 2021 of the operation to return goods to the supplier (VAT in the amount of 569.24 rubles was restored).
Attached to this letter is invoice No. 19 dated May 10, 2019, confirming the return of the goods.
p>Director of Knopka LLC ______________________I. B. Ostanin
If you discover an error in reporting that does not entail a tax reduction (for example, a technical inaccuracy in displaying a code), you can explain what error was made, indicate the correct code and provide evidence that this inaccuracy did not lead to a reduction in the amount of tax paid or send an updated declaration.
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If the payer has received a request from the tax service for an explanation, it means that the inspectorate has found something suspicious in the payer’s declaration. It should be noted that the Federal Tax Service Inspectorate provides desk control of all declarations and accounting reports using an automatic electronic program that can quickly identify errors in reporting (discrepancies between data in reports, discrepancies between the submitted declaration and the information available to the assigned inspector), as a result of which the Federal Tax Service Inspectorate submits a request for an explanation of this fact (clause 3 of Article 88 of the Tax Code of the Russian Federation).
There may be other reasons for submitting a request for explanation.
The tax burden on the main activities of the institution was reduced at the specified time due to a decrease in income and an increase in the institution’s costs...”
What are the VAT requirements?
After calculating data for 12 months, the company concluded that the share of deductions exceeds 89 percent. To find out what affects this indicator, we examined VAT returns in detail.
It turned out that the inspection included in the calculation the entire VAT, taking into account advances, both accrued for payment to the budget and declared for deduction. However, the Federal Tax Service of Russia believes that the share of VAT deductions should be calculated without taking into account accruals and deductions for advances (letter No. AS-4-2/12722 dated July 17, 2013). By recalculating the share of deductions, you can see how much the result will change if you take into account in the formula only the indicators of VAT accrued and presented on completed transactions and operations.
In our case, the recalculation gave an adjustment in the right direction. Without taking into account advance VAT, the share of deductions decreased by 2 percent and the deviation in the fourth quarter of 2015 was only 1 percent. Having recalculated the share of deductions due to VAT amounts from advances issued and received, the company came to the conclusion that prepayment amounts are the main reason influencing the level of the share of deductions. That is, activities related to sales in the billing period actually do not produce deviations in the share provided for by the Concept. The company sent these explanations, along with counter-calculations, to the inspectorate.
What are the income tax requirements?
Income tax requirements are often no less mysterious and even more time-consuming to explain than VAT. The company received a request as part of a desk audit of the income tax return for 2015 with a request to explain the discrepancies between the expenses reflected in the statement of financial results (Appendix No. 1 to the order of the Ministry of Finance of Russia dated July 2, 2010 No. 66n) and the expenses indicated in the income tax return. income tax. The inspectors also asked the question “why the tax base for 2015 did not change compared to the tax base for 9 months of 2015, despite a significant increase in revenue amounts.”
The approach to writing explanations on such issues depends on the desire and scrupulousness of the chief accountant. If the amount of expenses in tax accounting is less than in accounting, then we can limit ourselves to a short answer that the difference was formed due to expenses that are not accepted for tax purposes. The company itself decides whether to attach documents or not. After all, the inspectorate can demand documents in a camera room only in a limited number of cases.
The company explained that the increase in expenses occurred at the end of 2015 due to the creation of a reserve for doubtful debts in tax accounting. Because of this, a difference arose between accounting and tax accounting and the tax base for income tax did not increase significantly.
“Your declaration is full of contradictions...”
When conducting a camera examination, tax specialists not only look at whether the figures in the declarations themselves are consistent, but also compare the indicators reflected in them with the data in the financial statements.
And the data from profit declarations is compared with VAT reports. We will tell you what needs to be checked so that your declaration does not immediately arouse unhealthy interest among inspectors. Whatever method you choose to determine the amount of current income tax, the indicators on these lines must match. 22 PBU 18/02. If there are discrepancies, then most likely there is an error in accounting.
When tax revenue is greater than accounting revenue, it’s not scary. But if the revenue according to accounting data is much greater than the tax revenue, the inspectors will suspect that the “profitable” base is underestimated. Often, such discrepancies are explained by differences in revenue recognition for accounting and tax purposes. For example, in accounting, income from equity participation in other organizations is recognized on the date the general meeting of shareholders (participants) of the issuing company makes a decision on the payment of dividends.
Tax authorities believe that accounting revenue should be less than or equal to the sum of revenue indicators from VAT returns (excluding the tax itself and advances received) for the same period. Sometimes other income is also added here (line 2340 of the financial results statement), because the VAT base may also be there (for example, rental income).
Of course, this is not always true. Thus, in the statement of financial results, as part of other income, the entire amount of insurance compensation received from the insurance company, or the amount of excess compensation over the amount of losses from the insured event, may be reflected. 7, 18.2 PBU 9/99; clause 21.2 PBU 10/99. But these amounts are not included in the VAT tax base and are not reflected in the declaration Letter of the Ministry of Finance dated March 18, 2011 No. 03-07-11/61.
Tax authorities will compare with “profitable” income the net revenue reflected in VAT returns for the four quarters of the reporting year (amounts taxed at rates of 0%, 10%, 18% and non-taxable, from section 7 of the declaration). There are almost always discrepancies between the turnover of these declarations. For example, income in the form of exchange rate and amount differences, dividends are taken into account for profit tax purposes. 1, 2, 11 tbsp.
Of course, it is impossible to correlate the indicators of these lines directly. And as a sign of a possible offense, such an approach is rather rude. Indeed, in addition to the residual value of fixed assets in account 01 “Fixed assets”, the line indicator 1150 is also formed by debit balances in accounts 08 “Investments in non-current assets” and 07 “Equipment for installation”.
Nevertheless, sometimes such a comparison is used during checks. Because if you wrote off the depreciation premium in tax accounting. 9 tbsp. 258 of the Tax Code of the Russian Federation, then new fixed assets should have been reflected on account 01, therefore, the indicator of line 1150 of the balance sheet should increase. But this is not always the case, and there can be many reasons for such a discrepancy. For example, depreciation charges for the year turned out to be approximately equal to the cost of newly acquired fixed assets.
This always worries inspectors. The logic of the inspectors can be understood: many costs recognized in accounting are not taken into account for tax purposes, so it is more likely that accounting costs will exceed tax costs, and not vice versa. However, in certain reporting periods, tax expenses may exceed accounting expenses.
This situation will certainly be of interest to tax authorities. They check Letter of the Federal Tax Service dated 07/03/2012 No. AS-5-3/815dsp @ indicators of lines 010 and 030 of Appendix No. 3 to sheet 02 of the declaration with indicators of the cash flow statement (whether proceeds from the sale of non-current assets are reflected there). If there was no sale of property, then they will check what is the reason for the disposal of fixed assets and whether this entails an obligation to restore VAT (line 090 of section 3 of the VAT return).
Some of the comparisons described above, with some changes, are checked programmatically - after entering declarations into the electronic data processing system of the tax authorities. This is done using control ratios (CRs) developed by the Federal Tax Service for each tax reporting form. Tax officials declassified them relatively recently. Letter from the Federal Tax Service dated November 27.
2012 No. ED-4-3/ [email protected] Of course, there is a Constitutional Court both for the “profitable” declaration, Letter of the Federal Tax Service dated 07/03/2012 No. AS-5-3/815dsp@, and for the VAT declaration Letter of the Federal Tax Service dated 08/19/2010 No. ShS- 38-3/459dsp@. Control ratios allow you to look through the eyes of tax specialists both at the interrelation of indicators within the declaration (intra-document KS), and at the relationship with indicators of other tax returns and accounting records (inter-document KS). Therefore, it won’t hurt to check once again whether the declarations are filled out correctly using the CS.
